Success will be about hardware as much as software
This bet is as much about hardare as it is about software.
M$ innovations have often failed because the hardware or infrastructure wasn't there or wasn't there at the right price. This is similar.
I think windows 8 on a PC will be fine if it continues the refinements of Win7, with instant on, good battery life, memory mgt, security etc, without being particularly compelling as far as the metro interface goes. People will either disable it or just go straight to their desktop.
On a tablet however it's another matter.
Succeeding against Apple, will require that enough Metro apps are built to deliver equivalent functionality to the more common iOS apps, that win8 runs smooth and fast, that battery life is great, and that hardware requirements allow for a tablet at least as thin and light as the iPad 2.
Quite importantly, on tablets it will need to compete separately to PCs, because I don't plan to fire up Office 2010 to edit a document (unless it is rebuilt for metro).
One thing that's in its favor though, is some of the most popular iOS apps do things that are built right into windows, like connecting to and sending data between systems, zip/unzip, sharing and managing files, (apple doesn't even offer real file system access, so this will appeal even to semi-technical users).
But even so the challenge will be huge considering Apple will already have released iPad 3 when Win8 comes out.
The thing that will really make a difference is if M$ and its hardware partners can really manage to bridge the gap between tablet and PC seamlessly, giving us a device which works as a tablet when portable and can plug into a keyboard/mouse dock becoming a standard PC, when stationary.
I think having a single OS to work on, with all your files accessible from one place and software that gives you similar capabilities in either tablet or desktop mode is quite compelling.
Obviously tablet functionality will be more suited to content consumption than production, but if they can deliver a version of Office with a desktop interface and an alternative minimalist interface for tablet, on a device like the iPad 2, they've got my money.